You may have heard in many news or headlines that large companies often suffer ransomware attacks, resulting in data leaks and network failures. When this happens, companies will face huge fines, legal fees, and costs related to reputational damage.
In fact, ransomware attacks can also affect small businesses, and you need to protect your company from more and more cyber attacks.
Since the outbreak of the new crown epidemic, cybercrime has ushered in a new era of development: ransomware and cyberattacks have exploded, with more ransomware attacks occurring in 2021 than in the past five years combined. This year, hacker attacks and cybercrime have caused more than $6 trillion in losses to the global economy.
The high losses from cyber attacks have spawned a huge demand for cyber insurance. In order to avoid significant financial losses caused by attacks, executives around the world have begun to turn their attention to cyber insurance.
According to estimates by Munich Re, the world's leading reinsurance company, the global cyber insurance market will reach $7.8 billion in 2020, and it is expected to reach about $20 billion by 2025. Industries that have suffered severe cyber attacks, such as medical, manufacturing, IT, finance and services, have shown the strongest demand for purchasing cyber insurance.
In terms of regions, North America, especially the United States, is the strongest market. With the improvement of relevant laws and regulations and the increase in demand, the growth trend of cyber insurance will spread to Asia and Europe.
Investing in cyber insurance can exempt organizations from liability when they encounter cyber attacks to a certain extent and protect their financial security.
Generally speaking, cyber insurance can cover the following areas:
- Physical damage to computers and equipment caused by violations;
- The cost of hiring accident investigators;
- Business interruption costs;
- Data recovery costs;
- Assist any adversely affected third party to pay legal fees, settlement fees, etc.
However, just as personal insurance claims may encounter unexpected restrictions, cyber insurance policies are more complicated. Since the cyber insurance industry is still in its infancy, there is a lack of historical data, and standard forms of cyber insurance have not yet appeared, so underwriting, pricing, loss assessment, and claims are all huge challenges.
Therefore, before taking out insurance, it is necessary for companies to confirm the deductible, coverage, exemption policy in advance, such as "Does a given policy cover all types of cyber attacks or only certain types?", so as not to be passive when encountering a real cyber attack.
Trends in Cyber Insurance
As a data breach risk transfer tool, cyber insurance allows organizations to maintain a secure posture from cybercrime and malicious threat actors. Does this mean that in the current situation where cybercrime is becoming increasingly rampant, organizations can rest assured as long as they buy insurance?
Although frequent ransomware attacks around the world have greatly stimulated the demand for cyber insurance, the increase in the number and severity of cyber attacks will in turn lead to a tightening of the supply in the insurance market.
For example, strengthening the review of the insured's security measures, increasing premiums, strictly restricting terms and exclusions, reducing coverage, etc. It is foreseeable that with the tightening supply of cyber insurance, low-cost cyber insurance will become increasingly difficult to find in the future.
On the other hand, the seemingly booming cyber insurance industry is lurking with a huge vicious cycle crisis.
Enterprises originally purchased cyber insurance to prevent property losses, but this move has released a signal of attackability to a certain extent: our data assets are very important, and we have insurance, so it is more likely to get ransom from me!
So, the hacker group that learned of this information deliberately selected the insured company as the target of attack and carried out precise extortion. As a result, the overall success rate of extortion attacks has greatly increased, and the network environment has accelerated. Cyber insurance, which is intended to mitigate extortion attacks, has provided direction and a breeding ground for extortion attacks, which is undoubtedly contrary to the original intention of protecting network security.
What enlightenment does it give to enterprises?
The purpose of cyber insurance is to reduce financial losses after all prevention measures and mitigation strategies have failed. If the organization does not implement a standard network security platform, establish a complete security plan and implement network security education measures, the cyber insurance group will not approve the claim.
Therefore, in response to the evolving security threats, organizations need to start from the prevention end, and multi-layer protection can effectively control risks and reduce losses.
